In 2016 Rebecca Grace purchased a single-storey four-bedroom house in Sydney for $660,000. However, after purchasing the property she was informed by her mother that the former owner was the serial killer Ivan Milat. Milat also known as the ‘backpacker murder,’ hid his victim’s belongings in the roof and wall cavities, and is currently imprisoned for several life sentences. Ms Grace now wishes she knew the history of the house before purchasing the property. This begs the question, are real estate agents obligated to disclose the past of ‘stigmatised’ properties?
In Queensland, there is no state law that explicitly provides that real estate agents must disclose to potential buyers the unsavoury history of a house, such as a violent crime or illegal drug activity. However, under federal Australian Consumer Law real estate agents must not engage in misleading or deceptive conduct. Silence may constitute misleading or deceptive conduct where in all the circumstances it is likely to mislead or deceive. Therefore, real estate agents are obligated to disclose information which may reasonably affect a buyer’s decision to purchase a property. Breach of this obligation may result in rescission of the contract, and damages against both the seller and the agent.
In 2004 two Sydney real estate agents were fined by the Office of Fair Trading for failing to disclose to prospective buyers that the former owner, Sef Gonzales, had murdered his mother, father and sister on the premises three years earlier. The buyers placed a deposit on the house for $80,000.00 before becoming aware of the property’s history. The agents were fined more than $20,000.00, the buyers were released from the contract and the deposit was returned.
Therefore agents should be proactive and ask themselves:
“Would an ordinary, reasonable buyer, knowing the facts, bid differently?”
If the answer is yes then the information should be disclosed.
For more information head to the Australian Competition & Consumer Commission (https://www.accc.gov.au/consumers/health-home-transport/real-estate#false-or-misleading-claims).